Mining dispute threatens Dangote’s investment in Ethiopia

The government of Oromia Regional State does not have any intention to disrupt the investment activities and operations of Dangote Cement, owned by Africa’s richest man, Aliko Dangote.

A local newspaper, The Reporter wrote, quoting head of the regional communications affairs office and other cabinet members to have said this.

Top officials of the regional government came out to defend their position following a foreign media report alleging Dangote Cement is considering quitting its plant in Ethiopia “over a mining dispute”.

“Dangote may quit its cement operations in Ethiopia if authorities in the central state of Oromia don’t reverse an order to cement makers to hand over control of some parts of their businesses to local young people,” the US-based media outlet, Bloomberg reported yesterday.

Addisu Arega, head of the Oromia Communications Affairs office, told The Reporter that all cement factories in the regional state, including Dangote are operating very smoothly.

According to him, the regional government has discussed thoroughly with all cement factories including Dangote to handover their pumice and sand mining areas to unemployed youths in the region. As per the discussion, all cement factories have agreed to surrender some of their mining interests to play their part in the job creation efforts in the region.

Dangote Cement is willing to support the job creation endeavors of the Oromia Regional State, Onne Van Ser Wejide, Chief Executive Officer (CEO) of Dangote Cement, based in Lagos, told Bloomberg in March.

“The Nigerian company is discussing the proposal with Oromia officials and may be willing to sign contract. As long as that does not involve higher costs and lower quality and the quantity can still be delivered,” he told the news outlet.

Two months after, however, the company said it may shut its operations in Ethiopia if authorities in the central state of Oromia do not reverse an order to cement makers to hand over control of some parts of their businesses to local young people.

This time, Dangote’s Executive Director, Edwin Devakumar, also based in Lagos, told Bloomberg that the company will write to the federal government this week to ask it to intervene and will consider shutting the plant in Mugher, about 90 kilometers (56 miles) north of Addis Ababa as a “last option” if this fails.

All cement factories in the regional state are operating very smoothly and the regional government is not aware of Dangote’s complaints, Addis reiterated to The Reporter.

According to him, the regional government is open to discuss with Dangote over any of the complaints.

Transport Bureau head of the region, Takele Uma, who is also member of the Public Private Partnership Council of the region, on this part, told The Reporter that no communiqué was received from Dangote to be discussed by the regional cabinet, thus far. According to him, the Oromia cabinet is willing to discuss and redress the problems if Dangote comes officially.

“However, we are not prepared to give special treatment to Dangote especially at the expense of our unemployed youth,” he told The Reporter.

In spite of Devakumar’s statement to Bloomberg stating that the company will be writing to the federal government to ask it to intervene, Negeri Lencho, communication affairs minister of the federal government, denounced the news report and assured the local media that his government has not received any formal communiqué from Dangote, so far.

Lencho was adamant about the incorrectness of the news report, blatantly claiming “the news is false”. “Dangote will not leave Ethiopia or the region,” he said, adding that what has been said is far from the truth.

Deep Kamara, managing director of Dangote Cement Ethiopia, declined to comment on the controversy saying that he is “not in a position to make any statement”.

According to The Reporter’s sources in the regional administration, the latest statement from Dangote might also have something to do with the planned investment of the regional administration on a cement plant of its own, Ambo Cement Factory, which will be sharing resources with the three existing factories in Mugher area.

Dangote Cement started operation in Ethiopia in June 2015 inaugurating its USD 600 million plant with annual production capacity of 2.5 million tons.

Apart from original cement plant, Dangote has invested in PolyPropylene (PP) bag manufacturer in the same locality. It was also about to commence on the construction of a second cement plant when unrest began to unfold in the Oromia region.

Upon the request of the government, later on, Dangote has also announced its expansion plan to another investment portfolio: sugar industry.

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